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NEW DELHI: Get set to shell out more for luxury as there’s a rise in duty on import and assembly of high-end cars and motorcycles as well as devices such as Apple’s iPhone. Televisions will also get dearer as customs duty on parts used in LCD, LED and OLED panels is set to go up.
Prices of luxury cars, from companies such as Audi and Mercedes Benz, may rise by Rs 1.5 lakh to Rs 10 lakh, while also impacting models from mainline makers such as Hyundai. The latter will be increasing prices on certain models such as the Elantra sedan and the Creta SUV.
Jaitley increased the duty on cars that are assembled in the country (through the completely knocked down kits) from 10% to 15%.
Also, the FM slapped a Social Welfare Surcharge on imported products, adding an additional 10% on existing aggregate customs duties. He also raised the duty on certain parts and accessories used in the cars, a move that will surely impact the running cost for customers and manufacturing cost for companies.
These measures are meant to push local manufacturing, though most of the companies who were impacted by the move disagreed, saying demand will be hit, limiting their capacity to hire more and put in new investments.
The price hikes will come into force almost immediately and companies rued that this will have a very negative impact on demand, which is already under pressure after the government placed luxury vehicles in one of the top rate categories in the GST.
Audi’s A3 entry sedan will now be costing Rs 1.5 lakh more, while the competing CLA mid-size from Mercedes gets dearer by Rs 1.2 lakh. The S-Class saloon from Mercedes will see an increase of Rs 5 lakh while the Audi’s R8 sports car will be expensive by as much as Rs 10 lakh.
“The budget is very disappointing, and will impact our ability to create more jobs in India as well as boost our investments,” Rahil Ansari, the Head of Audi’s local subsidiary told TOI.
Roland Folger, the MD of Mercedes Benz in India, called the budget’s proposals as “unfortunate” and said it will hit demand for luxury cars. “It is against the spirit of ‘Make in India’… we are left with no option but to pass on the resulting increase in price to the customers.”
And not only are the luxury players impacted, volume-grossers such as Hyundai also complained of pressure. “We will be increasing prices across our product range, some due to higher costs of imported parts and the rest due to the customs hike on CKD cars,” Rakesh Srivastava, Director at Hyundai India said.
Aspirational bike-makers also need to pay more customs duty and now fear that demand will be hit. “This is an unnecessary penalty on us and the consumers, and prices will need to be hiked by 5-5.5%,” Vimal Sumbly, MD of Triumph, said.
Sunil Vachani, MD of contract manufacturer Dixon Technologies who makes TVs, phones and other electronics products, also criticised the move. “The decision to increase the duty on parts for TV panels is very retrograde. It will lead to a hike in prices and will not only impact consumer demand, but also limit our ability to expand more and create jobs. We are losing an opportunity.”
Manish Sharma, president of Consumer Electronics and Appliances Manufacturers Association, agreed. “While we are fundamentally in line with the approach of a phased manufacturing program in televisions, but the government needs to consult the industry before taking decisions that carry a large impact on business and consumer prices.”